Acquisition of Translation Services by Innovation, Science and Economic Development Canada New

February 2023

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The complaint

1. On August 18, 2022, the Office of the Procurement Ombudsman (OPO) received a written complaint from a supplier (the Complainant) regarding contracts awarded by Innovation, Science and Economic Development (ISED). The contracts were for English to French translation services and were awarded as call-ups under 2 Standing Offers (SOs) resulting from Request for Standing Offer (RFSO) no. ISED200187. The contracts were awarded on August 3, 2022, and August 4, 2022, and were valued at $8,699.86 and $8,699.99 (taxes included) respectively.

2. The Complainant contacted OPO stating it believed the call-up process was in contravention of the terms and conditions of the SOs as ISED subjected the Complainant to a second, arbitrary and undisclosed evaluation process, and the call-up did not contain all relevant details required to process the service request (e.g., document to be translated, due date of the deliverable, etc.) as per the terms of the SO.

3. This complaint raised the following issues:

4. On August 24, 2022, OPO confirmed the complaint met the requirements of the Procurement Ombudsman Regulations (the Regulations) and it was considered filed.

Mandate

5. This review of complaint was conducted under the authority of paragraph 22.1(3)(b) of the Department of Public Works and Government Services Act and sections 7 to 14 of the Regulations.

6. Pursuant to subsection 9(2) of the Regulations, the Procurement Ombudsman requested ISED provide all departmental records associated with the procurement and the award of the contract in question, as well as ISED’s procurement policies and guidelines in effect at the time of the solicitation. The Procurement Ombudsman also requested the Complainant provide additional information not submitted as part of the complaint.

7. The findings in this report are based on the records provided by the Complainant and ISED, as well as relevant publicly available information. The failure by either the Complainant or ISED to disclose any relevant records or information could impact the findings of this report.

Background

8. A SO is a method of supply established to streamline the procurement of frequently purchased goods and services by federal departments and agencies where demand is not known in advance. The use of SOs is intended to:

9. A SO is a continuous offer from a supplier to the government that allows departments and agencies to purchase goods or services, as required from time to time during the life of the SO, through the use of a call-up process incorporating the conditions and pricing of the SO. SOs are used when a department has an anticipated need to purchase goods or services but has not determined when, where and how much they will require during a certain period.

10. SOs are most suited to goods or services that can be clearly defined to allow bidders to offer firm pricing. SOs are not contracts, rather they are pricing agreements established by a tendering process by either competitive bidding or negotiation through a Request for Standing Offer (RFSO), which is subject to the normal contracting policies and procedures. In addition to the usual information contained in a competitive solicitation document, such as offer preparation instructions and clear evaluation criteria, the RFSO (and the resulting SO) must include the resulting contract clauses applicable to the ensuing call-ups, and, if more than one SO is being issued, ranking methodologies and call-up procedure(s).

11. Under a RFSO process, bidders submit proposals which contain pricing for the goods or services for the duration of the SO and are evaluated per the established criteria. When a SO is established with a successful bidder (referred to as Standing Offer Arrangement (SOA) holder), the SOA holder is offering to provide certain goods or services under specified terms, conditions and prices over a specified period of time. The SO constitutes the SOA holder’s offer. When goods and services available through an SO are required, departments issue a call-up which constitutes acceptance of the SOA holder’s offer. The combination of the SOA holder’s offer and the department’s acceptance of that offer constitutes a binding contract. Departments should not conduct a secondary competitive bid solicitation at the call-up stage, unless specifically contemplated under the terms and conditions of the SO.

12. There may be one or more SOs issued under a RFSO process. As noted above, when multiple SOs are issued, clear ranking methodologies and call-up procedures must be described in the RFSO so that bidders are aware of these when preparing their offer. The 2 most commonly used models of ranking methodology are right of first refusal basis and proportional basis. In the case of the right of first refusal, the department must contact the highest-ranked SOA holder first. If the highest-ranked SOA holder is able to meet the requirement, a call-up (i.e., contract) is issued against its standing offer. If that SOA holder is unable to meet the requirement, the department will contact the next ranked SOA holder and so on. In the case of proportional basis, the highest-ranked SOA holder receives the largest predetermined portion of the work; the second highest-ranked SOA holder receives the second largest predetermined portion of the work, etc. If call-ups are issued against standing offers using the proportional basis approach, the breakdown must be stated in the RFSO (for example, 50 percent to the highest ranked SOA holder, 30 percent to the second ranked SOA holder and 20 percent to the third ranked SOA holder). This predetermined distribution of the resulting work is to be described in the RFSO so that potential bidders are aware of these proportions when preparing their offer.

13. In some instances, ranking cannot be established. This occurs, for example, when prices are sought for a full range of items contained in a catalogue and not all suppliers offer the full range of items. Where the SOA holders cannot be ranked, the authorized call-up authority may choose whichever SO to use. Call-ups made against these SOs are non-competitive and only the non-competitive call-up authorities can be used.

Chronology of events

14. On July 16, 2021, ISED posted RFSO no. ISED200187 on the Government of Canada’s electronic tendering service site, buyandsell.gc.ca, for Translation, Editing (including comparative editing), Proofreading and Speechwriting services. The RFSO process resulted in the establishment of 31 SOs, as follows:

Types of services required and number of standing offers issued
Type of services Number of standing offers issued
English to French Translation 11
French to English Translation 7
French Editing 4
English Editing 3
French Proofreading 4
English Proofreading 2
Total 31

15. On May 31, 2022, the Complainant was issued 1 of the 11 SOs for English to French translation (SO no. 800099011) for the period of June 1, 2022 to March 31, 2023. The SO also included 4 one-year option periods. The value of the SO was $1,000,000.00 taxes excluded.

16. On or around June 27, 2022, an internal client at ISED (the ISED client) contacted 3 of the 11 English to French Translation SOA holders, 1 of which was the Complainant, to solicit proposals for “as and when” requested English to French translation services for the remainder of the initial SO period. The request contained a statement of work and required the SOA holder provide the following by July 8, 2022:

17. On June 28, 2022, the Complainant and the 2 other SOA holders sent emails to the ISED client questioning why samples of previous translations were required since an evaluation had already been conducted as part of the RFSO process. The ISED client replied that samples of previous work were required since none of the 3 SOA holders had previously done business with the ISED client’s section.

18. Later that same day, the Complainant confirmed via email to the ISED client its interest in the call-up, but asked for clarification as to what information was required in the proposal, as it had already provided a proposal with samples and a résumé as part of the RFSO process. The ISED client responded that the Complainant could simply resubmit the samples it had sent under the RFSO process and a signed letter confirming its capacity to translate a total word count of up to 32,079 words, by March 31, 2023, at the rates contained in the SO.

19. On June 29, 2022, one of the 2 other SOA holders submitted its proposal to the ISED client along with 3 samples of translations and résumés.

20. On June 30, 2022, the Complainant confirmed once again via email to the ISED client its interest in a call-up against its SO. The Complainant stated that while it could translate 32,079 words by March 31, 2023, it could not commit, in writing, to accepting the requests without knowing the actual requirement and associated deadlines. The Complainant also restated it considered having demonstrated its ability to provide the required translation services through the formal RFSO process. The Complainant confirmed its rates, attached 3 samples of previous translation work and confirmed that no other resource would be used to perform the translation.

21. Later that same day, the Complainant emailed the Contracting Authority (CA) at ISED asking for clarification on the call-up procedure. The CA replied:

“[t]hat is not typical to the general requests clients will send, however, perhaps that client just wants to confirm your capacity to be able to deliver high-level translation for Government departments. Despite having already been evaluated, I do not see an issue with adhering to their request. It may be due to the lack of experience with the department, or their Sector not having used your services before.

Most requests will simply be for a quote that reflects the Standing Offer Number along with the approved pricing outlined in the SO. While our Procurement team manages and reports on the Call-ups being issued under the Standing Offer, all of ISED in the National Capital Region are capable of issuing Call-ups against the Standing Offer.”

22. On July 4, 2022, the other SOA holder submitted its proposal to the ISED client along with 3 samples of translations and résumés of the proposed translators.

23. On July 18, 2022, the ISED client thanked the Complainant for submitting a proposal and sample of translations and advised that following a review by its team, a call-up would not be issued to the Complainant. Later that same day, the ISED client informed the 2 other SOA holders that their proposals and samples had been reviewed and that their proposals were accepted.

24. On July 19, 2022, the Complainant sent an email to the Project Authority (PA) at ISED listed in the SO, requesting more information on the ISED internal call-up process as it had never been asked in the past from other government departments to resubmit a proposal, demonstrate its competencies and enter into a call up without knowing what the translation requirement was and the associated deadlines.

25. On July 20, 2022, the CA replied to the Complainant that it was the principal point of contact for discussion related to the SO and that it would be happy to further explain the SO and associated processes.

26. On July 21, 2022, the Complainant replied to the CA, once again questioning the call up process as it was different than the one it was used to using with other federal departments. The Complainant specifically questioned the secondary evaluation process and the fact that the call-up was not for the translation of specific documents with precise deadlines, but rather was a general request to provide services over an extended period of time.

27. On July 25, 2022, the CA responded to the Complainant that “[i]f a manager/client wishes to request examples from you as part of their request for work, they are able to do that. It is not a secondary evaluation, but just a request from a Sector to review previous work. There is [sic] no criteria used, it is just a request from an employee to examine previous work.” The Contracting Authority went on to say that call-ups can be issued on an “as and when requested” basis, but ISED clients can also request call-ups for specific work (i.e., a document with a specific number of words returned in a specific time period).

28. Later that same day, the Complainant enquired to the CA why an employee would want to examine previous work if not for evaluation and selection purposes.

29. On July 26, 2022, the CA responded to the Complainant stating that the ISED client may have wanted “to review some previous work you have done. I cannot speak to why exactly they requested that information. If you can provide me the name of the individual—I can reach out.”

30. Later that same day, the Complainant wrote back to the CA stating that it considered the review process as a “non-competitive, subjective, discretionary and discriminatory process” and called into question the transparency and equity of the process. The Complainant restated its question as to whether the process used was acceptable.

31. On August 2, 2022, the PA replied to the Complainant stating it had requested that one of its senior officers look into the matter and help address the questions raised and asked for the contact info of the ISED client. The PA speculated that the reason the ISED client had decided not to issue a call up was because the document that needed to be translated might not have been complete or needed to be updated.

32. On August 3, 2022, the Complainant provided the contact information of the ISED client. The Complainant also reiterated to the PA that since the call-up was not for a document, but rather for a period, the decision to not go ahead was not because of the document being updated or incomplete.

33. Later that same day, the ISED client issued call up no. 3519408 to one SOA holder for the period of August 5, 2022 to March 31, 2023. The call up was for $8,699.86 (taxes included) for English to French translation on an as and when requested basis.

34. On August 4, 2022, the ISED client issued call up no. 3519414 to the other SOA holder for the period of August 8, 2022 to March 31, 2023. The call up was for $8,699.99 (taxes included) for English to French translation on an as and when requested basis.

35. On August 23, 2022, the ISED client confirmed to the CA that it had approached 3 SOA holders and requested samples of 3 translations in addition to proposals for its requirement. All 3 proposals were assessed, and call-ups were then issued to 2 successful SOA holders.

36. On September 6, 2022, OPO advised ISED and the Complainant that it launched its review of the complaint.

Analysis of issue and findings

Issue 1—Did Innovation, Science and Economic Development utilize the standing offer method of supply incorrectly?

37. The Complainant stated:

“I consider this call-up process to be in contravention of the signed Standing Offer for the following reasons:

38. The Department’s response to OPO stated:

“ […]

  1. This list of vendors is available on ISED’s intranet site, and clients (sectors) can view it before contacting an ISED procurement officer to put a contract in place.
  2. In the instance at hand, [ISED] reached out to three firms on the list and asked for samples of their work with the intent to award translation services in the total value of $17,400 (2 × $8,700).
  3. There is nothing in the standing offer to preclude this, and it is understandable that a Communications sector may wish to review the product before committing to a contract, given the nature of their work.
  4. Ultimately [ISED] chose two of the three firms […]. The third firm, the complainant, was not retained following the review of the sample of work.
  5. ISED followed all of the appropriate procurement guidelines, the actions taken […] were also permissible, and not against any contracting regulation or procurement clauses.
  6. In this particular case, it is likely that the vendor was unfamiliar with the process surrounding government contracting and standing offers.
  7. Before ISED could respond to the complainant to reiterate that the procurement regulations had been followed and provide further clarification on the regular processes related to a call-up against a standing offer, the official complaint was filed with the OPO.”

39. Treasury Board’s Directive on the Management of Procurement (DMP) came into effect on May 13, 2021 and was applicable at the time the 2 call-ups were issued. Section 4.5.3 of the DMP requires contracting authorities to simplify solicitation documents wherever possible to support streamlined processes.

40. Paragraph 1.5.5 b. of the Supply Manual states “…The Supply Manual may be used as a reference source for…internal (PSPC) procurements…” The Supply Manual contains policies and procedures intended primarily for the use of Public Services and Procurement Canada (PSPC) contracting officers. Many federal departments rely on the Supply Manual for additional guidance, given that PSPC undertakes procurements on behalf of other Government of Canada organizations. Section 3.40 of the Supply Manual provides guidance on the SO method of supply, as follows:

[…]

  1. All government policies, regulations and procedures related to contracting, including those required under the trade agreements, apply to the standing offer method of supply

[…]

  1. The standing offer method of supply cannot be used when:
    • […]
      1. It is intended to solicit bids each time goods or services are required. In these cases, another method of supply such as a supply arrangement should be considered

41. Furthermore, paragraph b of Subsection 7.10.1 of the PSPC Supply Manual states:

“Call-ups must be made in accordance with the procedure set out in the SO and, in the case of multiple SOs, in accordance with the call-up methodology described in all of the SOs being referenced. […]”

42. Since an evaluation process is conducted as part of the RFSO process, bidders who are found to be compliant under the RFSO process are issued a SO. As noted above, when a specific good or service is required, the department must follow the call-up procedures contained in the SO to award a call-up.

43. A RFSO and resulting SO must include clear call-up procedure(s) including the method of allocating the work among multiple standing offers.

44. The 3 SOs in question did not contain call-up procedures or a method of allocating work among the multiple SOs. The RFSO did include a requirement for Work Authorization in Part 4—Evaluation Procedures and Basis of Selection of the RFSO:

“4.7 Work Authorization

Work under this Standing Offer Agreement will be authorized as follows:

  1. The Project Authority will provide the Contractor(s) with a description of the work to be performed under the Standing Offer in sufficient detail to enable the Contractor to establish a firm price for the work.
  2. The selected Contractors shall submit to the Project Authority a brief work plan, schedule and firm price with supporting details or other method of basis of payment depending on the nature of the project.
  3. The assignments will be for a firm price. However, whenever the requirements/ statement of work cannot be well defined, the Project Authority may pre-authorize a time-rate payment, i.e., per diem rate, in lieu of a firm price.
  4. The work plan, schedule and firm price can be subject to negotiation between the Contractor and the Project Authority.
  5. Authorization to proceed with the work will be made by issuance of a call-up against a standing offer duly signed by the Contracting Authority and the Project Authority.”

45. With regard to the content of the Call-Up, Section 4 of the SOs Appendix C—Statement of Work states:

“4. Services/Definitions

[…]

The call-up should contain all the relevant details for processing the service request (e.g., the Call-Up Authority and or technical resource name, return date, the word count, and/or hour estimate, the nature of the text, type of service, etc.). It should also indicate the address where the text is to be returned. The SOA holder must make every effort possible to process all documents within agreed-upon deadlines.”

46. Further details are found in Section 7 of Appendix C—Statement of Work of the SOs, which stated:

“7. Client Support

During the period of the SOA, the ISED project authority will provide the SOA holder with the following:

47. Neither the RFSO nor the SOs contained rankings nor an allocation of work, such as right of first refusal or proportional methodologies. While the RFSO contained a requirement for Work Authorization, this was not included in the resulting SOs.

48. As per the PSPC Supply Manual, SOs “cannot be used when it is intended to solicit bids each time goods or services are required”.

Finding—Issue 1

49. ISED utilized the standing offer method of supply incorrectly because it:

  1. issued standing offers that did not contain call-up procedures or a method of allocating work;
  2. simultaneously solicited proposals from 3 SOA holders and compared those proposals, constituting in a second competitive process which is outside the terms and conditions of the SO; and
  3. issued “blanket” call ups that were not for defined work requirements but rather for future requirements, resulting in the call-ups acting as secondary standing offers.

Issue 2—Did Innovation, Science and Economic Development conduct a competitive procurement process using undisclosed criteria?

50. The Complainant stated:

“[…] I consider that I have been aggrieved by this process, for the following reasons:

51. The Department’s response to OPO stated:

“ […]

  1. This list of vendors is available on ISED’s intranet site, and clients (sectors) can view it before contacting an ISED procurement officer to put a contract in place.
  2. In the instance at hand, [ISED] reached out to three firms on the list and asked for samples of their work with the intent to award translation services in the total value of $17,400 (2 × $8,700).
  3. There is nothing in the standing offer to preclude this, and it is understandable that [ISED] may wish to review the product before committing to a contract, given the nature of their work.
  4. Ultimately [ISED] chose two of the three firms […]. The third firm, the complainant, was not retained following the review of the sample of work.
  5. ISED followed all of the appropriate procurement guidelines, the actions taken by [ISED] were also permissible, and not against any contracting regulation or procurement clauses.
  6. In this particular case, it is likely that the vendor was unfamiliar with the process surrounding government contracting and standing offers.
  7. Before ISED could respond to the complainant to reiterate that the procurement regulations had been followed and provide further clarification on the regular processes related to a call-up against a standing office [sic], the official complaint was filed with the OPO.”

52. The Dictionary of Canadian Law defines competition as “an event in which participants take part to demonstrate their skills or abilities in comparison to each other.”

53. Section 4.3.1 of the DMP states that “[c]ontracting authorities are responsible for […] [c]onducting procurements on behalf of the department or agency, and establishing contracts and contractual arrangements based on sound procurement principles, including fairness, openness and transparency to obtain best value.”

54. Section 4.35 of the Supply Manual states that “[a]ll evaluation criteria must be clearly specified in the solicitation document and their relative weighing and importance must be described.”

55. Section 4.40 paragraph a) of the Supply Manual states that “[t]he evaluation process and the method of selection such a lowest price, best value, etc., must be clearly described in the solicitation documents.”

Analysis—Issue 2

56. The ISED client selected and solicited 3 of the 11 SOA holders for English to French Translation services to be provided on an “as and when requested” basis from contract award to March 31, 2023 (the date of expiry of their SOs). The 3 SOA holders were sent a Statement of Work (SOW) and were asked to submit proposals and a sample of previous work as well as résumés of resources by July 8, 2022.

57. None of the SOA holders solicited were advised that they were in a secondary competition process.

58. ISED did not disclose its evaluation criteria and selection methodology as required by policy. ISED assessed all 3 proposals and awarded 2 call-ups for future translation requirements between contract award and March 31, 2023 (the expiry date of their SOs).

Finding—Issue 2

59. ISED conducted a competitive procurement process using undisclosed criteria. By inviting 3 SOA holders to submit proposals and subsequently awarding two call-ups, ISED initiated a competitive process but breached competitive procurement rules by failing to: (a) inform the SOA holders they were in a competitive process; and (b) disclose evaluation criteria or a selection methodology.

Other observations

60. As per subsection 12(1) of the Regulations, the Procurement Ombudsman is required to consider any relevant factors related to the procurement process in question when conducting a review of a complaint.

61. OPO identified additional issues with the RFSO and SOs as follows:

  1. ISED exceeded the maximum number of SOs to be awarded under this RFSO. Specifically, RFSO, Annex A—Requirement (Table 1), states that the maximum number of SOs to be awarded is 23 and the maximum number of SOs for English to French Translation is 6. ISED confirmed to OPO that 31 SOs were awarded, of which 11 were for English to French translation.

    SO limits are established to support the fair and transparent distribution of work amongst SOA holders. Had the actual number of SOs been disclosed to potential suppliers in advance, it could have affected their decisions on whether, and how to structure, their bids. Stronger oversight is needed to ensure RFSO limits are transparently disclosed and respected.

  2. A number of administrative errors were detected in RFSO and SOs documentation, such as:
    • a discrepancy in the validity period of the SOs: the cover page of the 3 SOs shows the SO period being from June 1, 2022, to March 31, 2027. Meanwhile, Section 4.1 of Appendix B—Terms of Payment of the SOs states an initial contract period of June 1, 2022, to March 31, 2023, and Section 4.2 lists 4 one-year option periods. ISED should ensure consistency in the information provided.
    • The terms and conditions contained in Part 6—Resulting contract clauses of the RFSO are not the same as those in the resulting SOs: In one instance, the General Conditions of a Service Contract incorporated by reference under section 6.1 of the RFSO are not the same as those included in the SOs. One example is General Condition 33 of the RFSO which pertains to Severability, whereas General Condition 33 of the Standing Offers pertain to Photography services. ISED should ensure that all information, including terms and conditions, provided in the RFSO is appropriately and accurately included in the resulting SOs to avoid misunderstandings and disputes.

Conclusion

62. The Procurement Ombudsman finds that ISED:

Compensation

63. In order to recommend the payment of compensation to the Complainant, subsection 13(2) of the Regulations requires the following:

“If a competitive process was held, the complainant must have submitted a bid in respect of the contract to which the complaint relates, unless it was prevented from doing so because of the actions of the contracting department.”

64. As a competitive process was held and the Complainant submitted a bid, the Ombudsman may recommend payment of compensation in accordance with the Regulations.

Recommendation

65. Based on the findings identified above and in accordance with Paragraph 13(1) (b) of the Regulations, the Procurement Ombudsman recommends payment of $1,473.94 as compensation for bid preparation costs in response to the 2 call-ups awarded as a result of the solicitation process.

66. In addition, the Procurement Ombudsman recommends that ISED:

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